Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/54225
Title: 
Quality differentiation if market share matters
Authors: 
Ellert, Alexander
Urmann, Oliver
Year of Publication: 
2010
Series/Report no.: 
Working Papers on Risk and Insurance 25
Abstract: 
Using a vertical differentiation model, we investigate the product quality strategies of two competing firms maximizing market shares. The firms are facing variable costs of quality improvement and choose their prices under the constraint of nonnegative profits. We show that in equilibrium there is no differentiation in quality if the market coverage is either increasing or decreasing and concave in quality. Otherwise the existence of an equilibrium depends on the structure of the game. If the firms choose their qualities simultaneously there is no equilibrium, while there is an equilibrium with a first mover advantage and quality differentiation in the sequential quality competition.
Subjects: 
Market share maximiziation
Vertical differentiation
Health care market
JEL: 
L10
L13
L21
I11
Is replaced by the following version: 
Document Type: 
Working Paper

Files in This Item:
There are no files associated with this item.





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.